MS Bitcoin, Cryptocurrencies and Blockchain_watermark
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vk.com/id446425943 |
III. Unanticipated problems/limits |
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Bitcoin Thesis Evolution
Thesis break down: New fundraising and capital allocation mechanisms
Total global investment in fintech companies ($bn)
50 |
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47 |
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40 |
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30 |
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29 |
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35 |
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ICOs |
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25 |
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Asia |
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20 |
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Europe |
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9 |
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12 |
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US |
10 |
6 |
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4 |
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0
2010 2011 2012 2013 2014 2015 2016 2017
2015 |
2018 |
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Estimated ICO Capital Raised Over Month (USDmn)
3000
2500
2000
1500
1000
500
0
M A M J J A S O N D J F M A M J J A S 2017 2018
Source: Token Economy, KPMG, Morgan Stanley Research
BITCOIN DECRYPTED! A BRIEF TEACH-IN AND IMPLICATIONS |
OCTOBER 2018 21 |
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III. Unanticipated problems/limits |
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Bitcoin Thesis Evolution
Thesis break down: New fundraising and capital allocation mechanisms (cont.)
2015 |
2018 |
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2017 ICOs by Status
Failed since |
Active ICOs |
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ICO |
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36% |
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32% |
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Failed at |
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Funding |
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32%
Capital Raised by ICOs ($B)
12 |
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Defunct Coins |
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Active ICOs |
$1.62B |
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10 |
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8 |
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6 |
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$1.30B |
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4 |
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$9.39B |
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$5.85B |
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2 |
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0 |
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2015 |
2016 |
2017 |
2018 |
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•Approximately 32% of ICOs failed after raising money in 2017. They managed to raise $1.3B.
Source: DigRate, Morgan Stanley Research
BITCOIN DECRYPTED! A BRIEF TEACH-IN AND IMPLICATIONS |
OCTOBER 2018 22 |
vk.com/id446425943 |
III. Unanticipated problems/limits |
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Bitcoin Thesis Evolution
Thesis break down: New fundraising and capital allocation mechanisms (cont.)
2015 |
2018 |
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ICOs vs. Startups
0% |
20% |
40% |
60% |
80% |
100% |
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Startups |
25% |
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Fail within the first year |
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ICOs* |
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64% |
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Startups |
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71%-75% |
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Fail over 10-yr period |
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?
Note: ICO failures includes ICOs who failed at funding and those that failed after their ICOs
Number of ICOs that Failed Before/After ICO
200 |
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ICOs that Failed at Funding |
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Later Defunct Coins |
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180
160
140
120
100
80
60
40
20
0
Jan-16 |
Mar-16 |
May-16 |
Jul-16 |
Sep-16 |
Nov-16 |
Jan-17 |
Mar-17 |
May-17 |
Jul-17 |
Sep-17 |
Nov-17 |
Jan-18 |
Mar-18 |
May-18 |
•Approximately 64% of potential ICOs failed before or after their ICOs in 2017. This is a higher failure rate than seen among
startups in the first year.
Source: DigRate, Morgan Stanley Research
BITCOIN DECRYPTED! A BRIEF TEACH-IN AND IMPLICATIONS |
OCTOBER 2018 23 |
vk.com/id446425943 |
III. Unanticipated problems/limits |
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Bitcoin Thesis Evolution
Thesis break down: New fundraising and capital allocation mechanisms (cont.)
2015 |
2018 |
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Source: DigRate, CoinCodex, Morgan Stanley Research
BITCOIN DECRYPTED! A BRIEF TEACH-IN AND IMPLICATIONS |
OCTOBER 2018 24 |
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III. Unanticipated problems/limits |
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Bitcoin Thesis Evolution |
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Thesis break down: Store of value |
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2017 |
2018 |
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Trailing 30 day Correlation between daily S&P500 and Bitcoin Price movements
0.6
0.5
0.4
0.3
0.2
0.1
0.0 -0.1 -0.2 -0.3
-0.4
Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Aug-18
Source: bitcoinity.org, Thomson Reuters, Morgan Stanley Research
BITCOIN DECRYPTED! A BRIEF TEACH-IN AND IMPLICATIONS OCTOBER 2018 25
vk.com/id446425943 |
III. Unanticipated problems/limits |
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Bitcoin Thesis Evolution
Thesis break down: Disruption Advantaged Refuge for Depreciating Currency
Spring 2018 Summer
Bitcoin value ($)
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Bitcoin Daily Trading Volume ($mn) |
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25,000 |
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6,000 |
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20,000 |
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5,000 |
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15,000 |
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4,000 |
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3,000 |
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10,000 |
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2,000 |
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5,000 |
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1,000 |
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0 |
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0 |
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Jan-16 |
Jul-16 |
Jan-17 |
Jul-17 |
Jan-18 |
Jul-18 |
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Jan-16 |
Jul-16 |
Jan-17 |
Jul-17 |
Jan-18 |
Jul-18 |
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Source: blockchain.info, Morgan Stanley Research |
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BITCOIN DECRYPTED! A BRIEF TEACH-IN AND IMPLICATIONS |
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OCTOBER 2018 26 |
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vk.com/id446425943 |
III. Unanticipated problems/limits |
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Bitcoin Thesis Evolution |
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Current Thesis: New Institutional Investment Class |
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• Cryptocurrency fund AUM US$7.11bn |
2017 |
Present |
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(CryptoFundResearch estimate).
•Types: 48% hedge fund, 48% venture capital, 3% private equity.
•Location: 50% US, 9% China/Hong Kong, 6% UK.
250 Number of cryptocurrency funds created |
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220 |
8000 |
Crypto Assets Under Management (USDmn) |
7110 |
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200 |
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198 |
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7000 |
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6000 |
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5860 |
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5580 |
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150 |
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5000 |
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107 |
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4000 |
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100 |
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3000 |
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2200 |
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50 |
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31 |
32 |
45 |
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2000 |
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675 |
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1000 |
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190 |
380 |
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0 |
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0 |
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Prior |
2014 |
2015 |
2016 |
2017 |
2018 |
Jan-16 |
Jul-16 |
Jan-17 |
Jul-17 |
Jan-18 |
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Jul-18 |
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Source: CryptoFundResearch , Morgan Stanley Research |
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BITCOIN DECRYPTED! A BRIEF TEACH-IN AND IMPLICATIONS |
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OCTOBER 2018 27 |
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vk.com/id446425943 |
III. Unanticipated problems/limits |
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Bitcoin Thesis Evolution
Current Thesis: New Institutional Class
2017 |
Present |
Daily CME Exchange Futures Volume
10000
8000
6000
4000
2000
0
12/18/17 |
12/22/17 |
12/29/17 |
01/05/18 |
01/11/18 |
01/18/18 |
01/24/18 |
01/30/18 |
02/05/18 |
02/09/18 |
02/15/18 |
02/22/18 |
02/28/18 |
03/06/18 |
03/12/18 |
03/16/18 |
03/22/18 |
03/28/18 |
04/04/18 |
04/10/18 |
04/16/18 |
04/20/18 |
04/26/18 |
05/02/18 |
05/08/18 |
05/14/18 |
05/18/18 |
05/24/18 |
08/10/18 |
08/16/18 |
08/22/18 |
08/28/18 |
09/04/18 |
09/10/18 |
09/14/18 |
09/20/18 |
09/26/18 |
10/02/18 |
10/08/18 |
10/12/18 |
10/18/18 |
10/24/18 |
•Contract Unit: 5 bitcoins
•Price Quotation: USD per BTC
•Final Settlement Procedure: Delivery is by cash settlement by reference to the Final Settlement Price, equal to the CME CF Bitcoin Reference Rate (BRR) on the Last Day of Trading
Source: CME Group, Morgan Stanley Research
BITCOIN DECRYPTED! A BRIEF TEACH-IN AND IMPLICATIONS |
OCTOBER 2018 28 |
vk.com/id446425943 |
III. Unanticipated problems/limits |
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Bitcoin Thesis Evolution
Current Thesis: New Institutional Class
2017 |
Present |
Average daily BTC/USD change (30 day trailing average)
16% |
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14% |
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12% |
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10% |
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8% |
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6% |
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4% |
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2% |
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0% |
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Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 |
Aug-16 Aug-17 Aug-18 |
Source: bitcoinity.org, Morgan Stanley Research |
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BITCOIN DECRYPTED! A BRIEF TEACH-IN AND IMPLICATIONS |
OCTOBER 2018 29 |
vk.com/id446425943 |
III. Unanticipated problems/limits |
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Bitcoin Thesis Evolution
Current Thesis: New Institutional Class
• Fidelity Digital Asset Services: Crypto trading and storage service |
2017 |
Present |
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•Bain Capital: Led $15M Series B in Seed Cx Institutional Trading Platform
•Genesis Trading: Has lent more than $500M in cryptos since March to institutions--$130M outstanding now
•Goldman Sachs & Galaxy Digital (Novogratz crypto bank): Invest part of $58.5M round in BitGo (crypto custodian)
•SETL: Granted license by France to operate CSD
•Vertex: Invests in Binance for a Singapore-based crypto exchange
•Coinbase: Raises $500M at $8B valuation to be crypto’s Charles Schwab/Fidelity/Nasdaq
•Gemini Trust: Hires Nasdaq to conduct market surveillance
Source: Morgan Stanley Research
BITCOIN DECRYPTED! A BRIEF TEACH-IN AND IMPLICATIONS OCTOBER 2018 30